By Charlene Crowell

At one time or another, many consumers have fallen behind on paying their bills. For the working poor, unemployed and underemployed, the struggle to get out of debt can be a daily challenge.

At the same time, there are businesses that exploit others’ financial woes, reaping high profits on debt purchased for just a few cents on the dollar. In some scenarios, debt buyers become nagging collectors who hound consumers at all hours of the day and night.

The irony is that the harassment is not always warranted or even accurate. Debt buyers have a documented history of suing the wrong person for the wrong amount.  In the worst scenarios, some consumers first learn of alleged debts after a court judgment has been entered against them.

These are only a few of the concerns that recently led the Consumer Financial Protection Bureau (CFPB) to take enforcement actions against the nation’s two top debt collectors. CFPB’s actions also suggest that financial abuses may be inherent in debt buyers’ business models. Together, the San Diego-based Encore Capital Group, Inc. and its subsidiaries comprise the nation’s largest debt buyer and collector. The Norfolk-based Portfolio Recovery Associates, the second largest debt operation, will halt collections totaling $128 million. The firms will also pay another $61 million in consumer refunds and an additional $18 million in penalties.

“Encore and Portfolio Recovery Associates threatened and deceived consumers to collect on debts they should have known were inaccurate or had other problems,” said CFPB Director Richard Cordray. “Now, the two biggest debt buyers in the market must refund millions and overhaul their practices. We will continue to take action to protect consumers from illegal and obnoxious debt collection practices.”

The litany of CFPB’s charged offenses read like a primer of what not to do in consumer lending. Here are just a few of the illegal and deceptive actions the firms were charged with:


• Illegally attempting to collect debt they knew, or should have known, may have been inaccurate or unenforceable

• Collecting debts through lawsuits and threats of legal action in unlawful ways

• Falsely telling consumers the burden of proof was on them to disprove the debt

•  Suing or threatening to sue consumers past the statute of limitations; and

•  Disregarding or failing to adequately investigate consumers’ disputes.

“The Portfolio Recovery Associates and Encore Capital Group consent orders underscore the questionable tactics used by even the largest debt buyers attempting to collect old debts – deception, intimidation, and the mass-production of lawsuits against the wrong people for the wrong amount of money,” said Lisa Stifler, a policy counsel at the Center for Responsible Lending (CRL). “Consumers deserve to be protected from wrongful collection and legal action.”

Further, abusive debt collection is annually among the top complaints to the Federal Trade Commission and the CFPB. In the aftermath of the Great Recession, CRL is working with lawmakers and regulators at both the state and federal levels to ensure that consumers are effectively protected from unscrupulous and predatory businesses.

Beyond CFPB’s enforcement actions, state attorneys general in Arkansas, Colorado, Minnesota, Pennsylvania, New York, Texas and West Virginia have all taken state actions against debt buyers and their collection practices. In New York alone, more than 7,500 court judgments valued at over $34 million have been vacated between 2014 and 2015.

Commenting on the New York actions, Attorney General Eric Schneiderman said, “My office will continue to hold debt collectors and lenders accountable so that New Yorkers can keep more of their hard-earned money where it belongs – in their pockets.”

“It is absolutely urgent that the CFPB propose new rules that will stop all debt collectors from engaging in abusive behavior, prevent them from collecting debts based on inaccurate information and punish them when they do lie to courts and consumers,” concluded Stifler.

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at